Main grid development planning in a deregulated market regime

To inspire the monopoly network owners to act in a rational and socio-economic way, the Norwegian authorities have introduced an incentive-based regulation regime. Experiences show that this regime has a shortage with respect to main grid development. A vital aspect of the regime is to provide corporate profitability to projects that are proven to be socio-economic profitable. The weak point in current regime is the lack of correlation between the effect of improved network utilisation due to an investment and the calculated corporate profit of the investment. A correct calculation of socio-economic benefit of an investment is essential in an improved future regime. This paper describes an improved method for simulation of main grid utilisation including a market clearing process where transmission restrictions are taken into account. In the Norwegian hydro dominated system, there is a strong and stochastic variability of timing and location of energy input to the system, and certain flexibility on the market side. The model takes these aspects into account in calculation of reduced cost associated with congestion and changes in cost of losses.